Forex reserve shrinks by $120m in a week

Bangladesh's foreign exchange reserve has fallen by nearly $120 million in the span of a week, central bank data showed.

The reserve stood at $19.40 billion on Wednesday, down from $19.52 billion on November 22.

The reserve has been calculated on the basis of the formula of the International Monetary Fund (IMF).

The country's foreign exchange reserve crossed $48 billion in August of 2021, which was a record high.

But reserves have continued to fall since due to higher outflow of foreign exchange compared to inflow.

As a result, the central bank has been pumping USD into banks to bridge their US dollar shortage.

Between July 1 and November 28, the BB sold upwards of $5 billion to banks, as per the central bank officials.

Every working day, the BB sells about $60 million to banks from its reserve, they said.

The dollar sales are mostly made to state banks to settle import payments of government agencies like the Bangladesh Petroleum Corporation, the Bangladesh Agricultural Development Corporation and the Bangladesh Chemical Industries Corporation.

The central bank sold a record $13.58 billion from its reserves to banks in FY23 to meet the USD shortage.

The country's forex reserve has been declining sharply since Russia's invasion of Ukraine. The conflict led to an increase in prices of commodities such as oil and gas, hurting import-dependent nations such as Bangladesh.